Tear up the rule book! Brand gurus, marketing whizzes and strategy wonks in every single industry worldwide are scrambling to crack the enigma of Gen Z. It’s a riddle worth solving because Gen Z—the digitally native population cohort born between 1993 and 2007—currently makes up 24% of the world’s population. That in itself means nothing except that they are emerging as the next big consumer powerhouse, and are projected to comprise over 40% of the world’s customer base by 2020. According to Frost & Sullivan, in the U.S. alone, they are already estimated to have a direct spending power of US$29 billion to US$143 billion, and an indirect spending power of US$600 billion.
Traditional approaches are unlikely to have much resonance with Gen Zers for the simple reason that they are driven by radically different impulses. For companies, this will mean a reassessment of long established rules of customer engagement.
So who are Gen Z, what do they want, and how does the automotive industry, in particular, stack up in this new universe?
Who They Are And What They Want
Broadly speaking, Gen Zers are ethnically diverse, socially aware, and environmentally conscious.
Authenticity and transparency are critical for them. It explains why this cohort prefers direct autonomy and control in decision making, does not like being ‘sold to’, is distrustful of big brands, and favors brands that focus on user-generated content and social media. Their purchase decisions are based on peer reviews, product information, and retailer ratings.
They are technologically savvy, switching easily between multiple platforms, across smartphones, TVs, laptops, and tablets to exchange information, conduct transactions, or communicate personally and professionally.
This is a generation with which you have an 8-second window to either perform or perish. The future for them is mobile, which explains the popularity of mCommerce and mobile payment systems. They demand convenience, speed and efficiency from their technologies. They appreciate companies, products and services that embody a culture of innovation.
They are also financially conservative. Attributes like product quality, availability, and value for money are central in the purchase process.
Most vexingly for companies, brand loyalty is no longer a given for this generation shaped by 24/7 connectivity, with its ready access to information and receptivity to non-formal channels of communication.
Gen Z And The Mobility Industry
Gen Z’s unique attitudes and aspirations—in terms of vehicle features, choice of travel modes, brands or even ownership—is starting to have a transformative impact on the automotive industry. Car companies are starting to notice them. In China, for instance, companies are now focusing on designing and developing dedicated car models for them – from day 1.
For a start, Gen Z’s preference for easy access to rather than ownership of mobility assets has motivated automotive manufacturers to rethink conventional strategies pivoting on car ownership. The financially prudent nature of Gen Zers has underlined the importance of improving vehicle price performance ratios and safety. As digital natives, Gen Z customers are likely to be more amenable to the idea of autonomous vehicles.
Owning and driving a vehicle will no longer be de rigueur. Instead, trends in many developed countries reveal that, compared to two decades or even a decade ago, people under the age of 30 are less likely to have a driving license. Moreover, even those who have licenses are driving less. Such changes have been triggered by several factors, including the cost of vehicle ownership; the growth of alternative modes of mobility, especially in urban areas; traffic congestion and parking scarcity; and social factors like people having families later than they did before.
Cities are where the upheaval has been the most evident. Worldwide, cities are attempting to solve the challenge of deteriorating air quality, overburdened infrastructure and congested road networks by encouraging shared and public transport over private vehicle ownership. This approach meshes with the social and environmental consciousness of Gen Z, while simultaneously offering the promise of a seamless and multimodal mobility system.
Another trend that I foresee is that members of Gen Z will be mode agnostic, opting for the form of transportation that that can most efficiently transport them from one place to another.
And as to which companies have cracked the Gen Z code – Tesla and Uber can take a bow. In a recent Frost & Sullivan study on Gen Z as future customers, Tesla emerged as an aspirational brand. Unlike traditional car companies with a product to sell, its popularity stemmed from the disruptive ideals it represents. In addition to ticking the box for being environmentally-friendly, Tesla also scored high with Gen Zers for being ‘cool’, a brand that was exciting, innovative and challenged the status quo. And, of course, who can discount the star wattage of Elon Musk, the ultimate anti-establishment, non-big brand maverick.
Simultaneously, Uber was perceived as being innovative and user friendly by Gen Z consumers. The ride-hailing giant enjoyed high awareness and popularity, mirroring the widespread acceptance of the sharing economy and the notion that calling or hailing cabs on the street is completely inefficient and outmoded.
How Should Automakers Respond
As automakers begin to adapt the ways they engage with Gen Z, here are a couple of key lessons to keep in mind.
Firstly, it’s about the experience. This cohort is keen on a smooth, omnichannel experience to acquire products and services. At the end, it is not about buying and selling, it is more about a tangible and holistic experience, a fact that companies like Amazon with Amazon Vehicles have been quick to grasp and act upon. Automakers should, therefore, provide superior, engaging, effective and streamlined customer experiences.
Secondly, Gen Z is all about uniqueness, individualization and personalization. Automakers should, therefore, design flexible offerings that accommodate individual preferences.
Thirdly, the future is mobile. Gen Z will continue to demand that services and products be available on mobile platforms. This will align with the trend toward on-demand accessibility and availability of products/services on mobile platforms and will underpin the appeal of concepts like ‘car as a marketplace.’ In the meantime, social media will come under the spotlight as a direct platform for buying goods and services.
Fourthly, Gen Z will vote with their wallets for companies that are environmentally and socially responsible.
And, finally, companies that embrace authenticity will find that Gen Z customers will be their best brand ambassadors.
You can read more about trends and preferences among this new customer base in Frost & Sullivan’s recent study on Gen Z as Future Customers
Article was originally published on Forbes.com